European etac producers’ margins remain under pressure

05 July 2013 18:00  [Source: ICIS news]

LONDON (ICIS)--While producers of European ethyl acetate (etac) are extremely keen to improve margins by increasing July prices, there has been little option but to roll June prices over into July, participants said this week.

One producer rolling over its June prices for at least the first 10 days of July said that there have been many upswings in feedstock costs during the last 12 months, but it has not been able to pass those on to customers.

“Prices are dictatated by the market. We try to get recovered or increased margins where possible, but it’s very difficult,” the source said.

The producer added that the problem stems from a high level of competition from imported volumes, particularly from India.

A Mediterranean producer said: “We noticed another downward trend, €20-30/tonne ($26-39/tonne) down from June. This is due to the [cheaper] imports from India and China.”

The source added that imported material is priced at around €850/tonne FD (free delivered).

“Importers make the first stand,” the second producer added. “All the producers are under pressure from costs. Demand is worse than last year in terms of margins. There wasn't a seasonal increase [in demand] this year.”

The source is unsure of the reason for this, but adds that macroeconomic conditions were also poor last year.

The producer added: “We’re underproducing because we’re not able to compete. We are keeping our customers, a small amount of customers, but we can't compete with €850/tonne.”

However, another producer has not experienced fierce competition, and merely views it as healthy. This source also questions the idea of cheaper Indian volumes in the European market, arguing that acetic acid and ethanol prices are high in India.

($1 = €0.77)

By: Jo Pitches
+44 208 652 3214

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